During a joint conference call of the NAIC Executive and Plenary Committees on Friday, Oct. 14, the full body of the NAIC approved enhanced disclosure requirements for insurers that utilize reinsurance with limited risk transfer features, also known as finite reinsurance.
The use of finite reinsurance has received considerable attention during the past several months, because of its misuse by some high-profile insurers according to the NAIC.
State insurance regulators, working in a coordinated fashion through the NAIC, have been evaluating existing relevant statutory financial reporting since last year.
The disclosures adopted for the 2005 annual statement require a property/casualty insurer to report to state insurance regulators the contract terms and management objectives of any finite reinsurance agreement that has the effect of altering policyholders' surplus by more than three percent, or representing more than three percent of ceded premium or losses.
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